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INSURERS
are up in arms against a recent mandate from the Bureau
of Internal Revenue (BIR) that effectively diminishes
their capacity to sell new policies.
The
industry wants the bureau to immediately suspend this
mandate that limits their capacity to sell their
products and make more money.
Soon
after BIR chief Lilian Hefti issued Memorandum Circular
30-2008 last April, Philippine American Life and General
Insurance Co. (Philamlife) president and chief executive
officer Jose Cuisia Jr. and his colleagues called on
Finance Secretary Margarito Teves and asked that the
circular be suspended.
Cuisia
said the BIR mandate, while beneficial for fiscal
operations, raised the cost of life and nonlife
insurance policies that companies must pass on to
consumers to stay competitive.
The
added cost creates friction that slows down sales that,
in turn, translates to lower tax revenues for the
government, former governor of the Central Bank of the
Philippines Cuisia explained.
In
addition, the new mandate prohibits insurers from
deducting from gross sales expenses like agents’
commissions—a situation that widens the tax base and
makes life more difficult for the industry.
“We
appealed to Finance Secretary Teves and he told us to
write to BIR Commissioner Lilian Hefti,” Cuisia said.
His
insurance firm paid P1.6 billion in taxes just last
year, which makes Philamlife one of the largest
taxpayers in the country.
“But
will BIR Commissioner Hefti do away with the new
memorandum?” Cuisia asked. He recalled that in the
1970s, then-finance minister Cesar Virata imposed a
5-percent premium tax on insurance policies ostensibly
as a temporary measure.
The
temporary imposition lasted for decades and is now being
raised even higher, Cuisia complained.
He said
the new impositions make it imperative for those with
insurance needs to buy from foreign insurers as local
costs rise.
The
competition from foreign insurers was seen to benefit
from the new BIR mandate, Cuisia said. |
